Financing policy of Czech automotive companies

Abstract

Constructing accurate capital structure is crucial element in guarding the company from unexpected financial and non-financial shocks. Still there is not scientific consensus among economist that would show which is the optimal capital structure for the company. The aim of the study is to investigate factors affecting capital structure of the company's operating as automotive suppliers in Czech Republic. Existing theories on capital structure has been tested to identify which one of them represents current state of the financing policy on the Czech automotive industry. The study performed panel data analysis of the companies operating in automotive industry. Results of our study show that long term debt (LTD) and profitability (P) are considered to be crucial determinants that influence the capital structure of the Czech automotive suppliers.